Alternaty - Hotel operator selection process - Jan 2013
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Transcript of Alternaty - Hotel operator selection process - Jan 2013
A boutique real estate firm, we partner
with hotel and resort developers to
deliver alternative real estate products.
Hotel Operator Selection Process Hotel/Resort Asset Class - Management Options
Presented by Mauro Gasparotti
Executive Director
Presentation Outline Hotel Operator Selection
• Players and interests
• Real estate assets vs hotel and resort assets
• Product variety
• Management system
• Operator Selection process
• Operator Selection criterias
2
Players and interest Hotel Operator Selection
End users: Local and International travelers
Value for money, comfort, security, local experience.
Brokers : Travel agent
Client’s positive feedback, sell package tours
Brokers : Online travel agent
Price margin (high commissions)
Developers
ROI,
shorten payback period
Management Companies
Brand expansion, brand enhancement,
management fee
Investors
(operating asset)
Diversification, trophy asset.
Lenders
Secure Investment, collateral
value
Villa and unit owners
Second home use, capital value
Timeshares owner Annual use, exchange programs
3
Real estate vs Hotel/resort assets Hotel Operator Selection
What is the most perishable product in the history of economics?
…A night in a hotel room, which ‘spoils’ immediately if not sold each day.
• More volatile performance as price can vary daily (easy can see a 30% increase y-o-y, but easily can see a 30% decrease y-o-y) and your product is sold daily
• Require a professional management and strong global sale system
• Require architects/designers that understand hotels/resort s(or need management companies involved during design)
• Strong intangible influence, often beyond owner’s control, into the value of the product (for example the visa process can affect the “value perception” of your hotel room)
• High value/ experience transparency (for example trip advisor cruel review test)
• High reliance on third party brokers (travel agent or on line websites) that takes large commission (Agoda can ask as much as 30% of room price)
• High reliance on travel trends
• High reliance on market shock (terrorist attack, climate changes, political turmoil, natural disasters)
4
Large variety of product Hotel Operator Selection
Timesharing
Ninh Van Bay
Condotel
Best Western Nha
Trang
Branded Residence
Hyatt Regency Danang
Freehold Ownership
Ocean Villas Danang
Fractional Ownership
Beach Republic
Koh Samui, Thailand
Leasehold Ownership
The Sanctuary Long Hai
Private Residence & Destination Club
The Ritz-Carlton
Destination Club
Hotel Room
Intercontinental Saigon
TRADITIONAL ALTERNATIVE
5
Integrated in one sole development Hotel Operator Selection
Sheraton
Resort
Townhouse(
residential
for sale)
Timeshare
Fractional
Sales
Golf
For illustration only
6
Management Options
Hotel Operator Selection
Before considering a management company, developers should be aware of all the possible options
and alternatives that match their investment strategy. Do you really need a brand?
Hire operator
Operate
Independent
Franchise
Branded
No branded
Independent
Franchise
7
Why may an international brand be required? Hotel Operator Selection
• Highly competitive marketplace with several similar
product
• Developer seeks to increase rates and occupancy
• Developer seeks to reduce operating costs
• Residential component in need of an identity
• Residential component to increase trust of buyers
• Developer with low experience in the hospitality field
• Developer seeks low or no involvement in daily
operations
• Bank requesting developer to involve a professional
management company
8
Which brand to choose? Accor example Hotel Operator Selection
Design Flexibility
Standardized Brand Design
Economy Luxury
For illustration only
9
Which brand to choose? Marriott example Hotel Operator Selection
Design Flexibility
Standardized Brand Design
Economy Luxury
For illustration only
10
Other options Developers may have not considered
Hotel Operator Selection
• Various Formulas:
Hotel Name managed by Brand Name
Hotel Name powered by Operator Name
“White label” managed by the International Operator
• Manchise Model (Management + Franchise)
• Marketing and Distribution agreement only
• Asset Lease with Profit Sharing
• Asset Lease with Fix Lease
• Management with Guarantee Return
International Operators will typically refuse any of the above, unless not asked extremely politely … this means, Developer need professional consultants and suitable project to persuade operators to accept those options.
11
Operator selection process
Hotel Operator Selection
Stage 1
Understand owner’s
objectives
List suitable
international
management
companies (10-15)
Prepare bidding
documents and
request for EOI
(including client’s
objective)
Collection of EOIs
Stage 2
Shortlist most
suitable options
(3-5)
Collect commercial
terms
Start negotiations of
commercial terms,
key provisions and
performances
Finalize the MOU
Stage 3
Request for HMA,
TSA and pre-
opening agreement
Negotiation for
provisions and key
elements
Finalize the TSA
Finalize the HMA
12
Understanding Owner’s objectives Hotel Operator Selection
A clear understanding of the investment strategy and product is the key for a correct selection of
management option or brand choice.
Operator only Operator - partner
Flexible brand (lower costs) Inflexible brand
Maximise ROI Landmark property
Build and sell Build and hold
and other 100 questions...
Full operator control Full owner control
Without residential With residential
13
• Brand specifications (branding general
guidelines, design and sizes)
• Procurement process and approval
• Indication of construction costs
excluding land per room (if available in
Vietnam, otherwise other countries)
• Performances expectations
• Expected rates (published rate and ADR)
• Competitor positioning
• Marketing and distribution
• GDS systems and loyalty programs
• Typical target market (client by origin)
and expectation for the proposed area.
• Training and pre opening
• Information on the training program for
operating hotels
• Information on the training program for
the pre opening
• General business plan indication,
including the critical success factors for
the proposed brand
• Point of difference to existing brands
• Design and architectures
• Facilities suggested for enhance
performances
• Comments on initial design
• Any other information may be relevant
• Experience in mixed use buildings
• The list could be modified based on the
selection process and information
needed
1st Business Plan: Questions for Operator
Hotel Operator Selection
14
• Owner to approve budgets
• Owner to approve general manager and
financial controller
• Bank accounts to be the property of the owner
• Owner’s right to deal with the hotel
• Restrictions on competitive use of the
operator’s brand name
• Performance criteria
• Asset management
• Opening date and term
• Restrictions on redevelopment
• Fees management
• Fee marketing & maintenance
• Reliance upon forecasts
• Confidentiality clauses
• Third party fees
• Policy approvals
• Shared services and group purchasing
• Branded operator’s equipment
• Replacement reserves
• Independent external auditors
• Insurances
• Arbitration
• Indemnities
• The technical services agreement
• Pre-opening period
• Supervision and control
• Credit of patrons
• Repairs
• Review hotel position
• Trademark licence
• Use of the brand name
• Restrictions on the operator
Major Points of Negotiation in HMA Hotel Operator Selection
15
Hotel developer vs the rest of the world Hotel Operator Selection
Higher Investment Amount
Lower Investment Amount
• Hotel Operator
• Architects
• Master planners
• Interior Designers
• Villa/Unit Buyers
• Local authorities
• Suppliers
• Competitions
• Bank Interest
• Developer
16
About Alternaty
Alternaty is a boutique real estate firm providing
a suite of consulting services throughout the
development lifecycle. Headquarter in HCMC
Vietnam, with associates in Thailand, Myanmar
Indonesia and the Maldives.
Our team has 17 years of combined experience in
the real estate industry with an extensive track
record in hotel and resort advisory in Indochina
Region
More than 40 hotel and resort valuations in
Vietnam, Lao and Cambodia.
More than 35 feasibility and market studies.
12 Operator selection advisory assignments.
Vast experience in mixed used residential
resorts, rental pool structure and fractional
ownership.
Alternaty Alternative Real Estate
18
How Can We Help You? About Alternaty
• We are a real estate consulting firm providing specialist advice for real estate developers and investors.
• Our approach is to forge partnerships with developers to provide a suite of consulting services including market
research, development advisory, feasibly study and highest and best use analysis.
• We specialise in the early stages of planning and development when accurate and detailed advisory adds significant
value for the whole development and maximises the returns for developers, investors or any players involved
throughout the development process.
Investment
Services
Hotel Operator
Selection
Villa
Management
Hotel
Pre-opening
Services
Hotel
Operations
Review
19
The Various Stages of the Property Lifecycle
Our scope of services
Land Planning
Market research
Feasibility study
Valuation
Hotel operator
selection
Development
recommendations
Highest and best use
analysis
Due diligence
Investment
Construction
Design review (from
operation stand point)
Pre-opening budget
Interior design review
(from operation stand
point)
Facilities review
Positioning and
branding identity
(operation stand point)
Operator and
consultant selection
Organization chart
review
Pre-opening
Interim GM service
(pre-opening GM)
Sale and marketing
review
Tailoring of hotel
standard operating
procedures (SOP)
Hiring and training
Pre-opening check
list review and
implementation
Operation
Owner representation
service
Periodic operational
review and critical
points analysis
Training program
Sales and marketing
review
Budget control and
targets
Online reputation
control and review
Upgrade
Reposition
Hotel operations
review
Inspection and
operational analysis
Service upgrade
implementation and
training
Mystery guest service
At any stage of the development process, hotel owners can benefit from professional advice.
20
Our Scope of Services About Alternaty
• A boutique real estate firm providing a suite of consulting services throughout the development lifecycle.
Investment
Services
Feasibility study
Cash flow modelling
Highest and best
use analysis
Development
recommendations
Valuation
Sales & Marketing
Exit strategy
execution
Alternative Real
Estate
Hotel Operator
Selection
Understanding the
Client’s objectives
Consideration of
management options
Preparation of
biddings documents
Collection of EOIs
Comparison matrix of
candidates
Shortlist of suitable
options
Negotiation of
commercial terms of
MOU, TSA and HMA
Villa
Management
Resort style
management of
second home
projects
Website bookings
and reservation
engine
Villa Brand
Standards
Standard Operating
Procedures
Butler Services
Hotel Pre-
opening Services
Functionality &
Facilities Review
Branding and
Service Concept
Hotel operation
forms & tailored
amenities list
Organization chart
and staff positioning
Hiring and training
Tailoring of hotel
standard operating
procedures (SOP)
Hotel Operations
Review
Tailored monitor of
hotel performance
Inspection &
operational analysis
Full operational
review of each
department
Departmental
recommendations
Implementation of
Standard Operation
Procedures (SOP)
Monthly Supervision
21
Annex
Alternaty Hotels + Resorts Newsletter Annex
• Each edition of the Alternaty Hotels + Resorts Newsletter features a certain Real Estate Market and has the following
international coverage
• Sent to more than 10,000 active real estate players in Asia Pacific
• Campaign Monitor software used to track feedback of recipients
• Use of Social Media Channels including Slide Share, LinkedIn, Facebook, Website Blog)
• The Newsletter generally contains the following
topics:
• Real Estate Market Overview
• Location
• Access
• Supply
• Demand
• Seasonality
• Hotel Performance
• Operating Costs
• Land Price
• Economics Update
• Regional News Update
• Feature Article
• Investment Opportunities
23
Alternaty in the Press Annex
Rudolf Hever, interviewed on HTV9, speaking
at the Vietnam Hospitality Management
Conference on “Fractional Models:
Opportunities and Risks”, November 2012.
“Vietnam’s island paradise: but where
are the residential products?”, Rudolf
Hever, The Property Report, Dec 12 –
Jan 13
“Vietnam’s island paradise: but where
are the residential products?”, Rudolf
Hever, The Property Report, Dec 12 –
Jan 13 Mauro Gasparotti, interviewed on HTV9
(Nhip Cau Doanh Nhan - Businessman
Bridge) on Fractional Sale and
Timesharing Models, December 2012.
24
Conferences & Events Annex
Left-Right:
Mauro Gasparotti (L) and Rudolf Hever (R)
presenting the award for Best Condo
Vietnam (Hyatt Regency Danang to Mr Rick
Mayo-Smith, Managing Director, Indochina
Capital (C) at the South East Asia Property
Awards 2012 in Singapore.
Mauro Gasparotti (second from left)
speaking at a panel discussion on “Vietnam –
Finding the way forward” at the HICAP
Update held in Singapore in March 2013.
Left-Right:
Mauro Gasparotti (third from left) speaking
at a panel discussion on “Navigating into the
future: Vietnam” at the the Asia Pacific Hotel
Investment Conference heldin Bangkok in
May 2013.
Rudolf Hever (R) chairing a panel discussion
on “Condo Hotel, Villas and Branded
Residences – How Best to Accelerate Return
of Capital?” at the Asia Pacific Hotel
Investment Conference hled in Bangkok in
May 2013.
25
Connect with Us! Alternaty Social Media Channels
Annex
Twitter Facebook LinkedIn
og
SlideShare YouTube
26
Alternaty Villas – Online Direct Booking Website Annex
27
Thank You
Disclaimer: This document has been prepared in good faith and for general informational purposes only. Nothing herein contains investment, legal,
tax and/or other advice and investors should seek independent professional advice before making any investment decision. While reasonable care
has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy or completeness of such
information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission.